Bloomberg News

Vietnam's Bonds Gain This Week on Inflation, Rate Outlook

June 01, 2012

Vietnam’s benchmark five-year bonds rallied this week on speculation inflation will slow and the central bank will cut interest rates. The dong was steady. Consumer-price gains eased to 8.34 percent in May from a year earlier, the least since August 2010, official data show. The repurchase rate will be reduced to 10 percent by the end of June and to 8 percent by the end of the third quarter from the current 11 percent, according to a research note released today from HSBC Holdings Plc.

“For the rest of the year, we expect inflation to stay in the single digits,” Trinh D. Nguyen, a Hong Kong-based economist at HSBC Holdings, wrote in the note.

The five-year bond yield fell seven basis points, or 0.07 percentage point, to 9.61 percent this week, according to a daily fixing from banks compiled by Bloomberg. It was little changed today.

The dong was steady this week and today at 20,870 per dollar as of 3:54 p.m. in Hanoi, according to data compiled by Bloomberg. The State Bank of Vietnam set its reference rate at 20,828, unchanged since Dec. 26, according to its website. The currency is allowed to trade as much as 1 percent on either side of the rate.

To contact Bloomberg News staff for this story: Diep Ngoc Pham in Hanoi at dpham5@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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